CALGARY, ALBERTA--(Marketwire - July 3, 2012) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Sagres Energy Inc. (TSX VENTURE:SGI) ("Sagres" or the "Company"), is pleased to announce that it has entered into a definitive farmout agreement on the El Triunfo block (the "Farmout Agreement") with an arm's length third party international oil company with current production in excess of 15,000 barrels of oil per day (the "Farmout Partner"). The El Triunfo Block is comprised of 25,205 gross acres in the oil-rich Llanos Basin in Colombia (the "Block") and is at an advanced exploration stage with multiple drill ready prospects and extensive seismic coverage, including 3D seismic, on the main prospect.
As previously announced, Sagres acquired the rights to earn a participating interest in the Hydrocarbon Exploration and Production Agreement (the "E&P Agreement") which requires the partners to drill two exploration wells on the Block. Sagres has the right to earn an undivided 70% working interest and assume operatorship in the Block by paying 100% of the costs relating to the first of the two wells (the "Drilling Commitments"), with the opportunity to earn up to an additional 12.5% interest through the payment of costs related to the second well.
Under the Farmout Agreement, Sagres has granted a 35% net working interest in the Block in exchange for the Farmout Partner assuming 50% of Sagres' historical and future costs associated with the Drilling Commitments. The Farmout Partner also has an option to acquire a further 10% interest in the Block from Sagres by paying an additional 20% of the costs associated with the drilling of the first well.
Mr. Ahmed Said, Director, commented "This transaction validates the Company's view on the near term potential of the El Triunfo block. Our farmout partner is an experienced operator with an established track record in Colombia, and given the current status of capital markets, we hope to develop the Company through accretive transactions that result in minimum dilution to our shareholders."
Closing of the Farmout Agreement transaction is subject to customary closing conditions, including the receipt of the approval of the TSX Venture Exchange, the ANH and all other necessary regulatory approvals.
Closing of Private Placement Financing
The Company also announces that it has closed its previously announced private placement financing. Pursuant to the closing, the Company has issued and sold 10,833,333 units (the "Units") at a price of $0.06 per Unit for gross proceeds of $650,000. Each Unit is comprised of one common share of the Company and one common share purchase warrant (a "Warrant"). Each Warrant will entitle the holder thereof to acquire one common share of the Company at an exercise price of $0.12 per common share for a period of 18 months following the closing date of the Offering. If at any time after four months and one day from the closing of the Offering, the common shares of the Company trade at $0.20 per common share or higher (on a volume weighted adjusted basis) for a period of 20 consecutive days, the Company will have the right to accelerate the expiry date of the Warrants to the date that is 30 days after the Company issues a news release announcing that it has elected to exercise this acceleration right.
The gross proceeds from the first tranche will be used to fund exploration activities of the Company and for general corporate purposes. All securities issued pursuant to the private placement are subject to a four month hold period following the closing date. Closing of the financing is subject to receipt of regulatory approval, including final TSX Venture approval.
This press release is not an offering of securities for sale in the United States. The common shares have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from the registration requirements of that Act.
Sagres Energy Inc. is a Canadian based international oil and gas exploration company with an exploration portfolio in Colombia and Jamaica. The common shares of Sagres are listed for trading on the TSX Venture Exchange under the symbol "SGI".
This press release contains "forward looking information" within the meaning of applicable Canadian securities legislation. Forward looking information includes, but is not limited to, statements with respect to the farmout of the Block; the potential of the Block; and the use of proceeds of the private placement financing. Generally, forward looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, geopolitical and social uncertainties; the actual results of exploration activities; regulatory risks; risks inherent in foreign operations; and other risks of the oil and gas industry. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
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